Kiromic BioPharma, Inc. has entered into an agreement to exchange $2.4 million of debt for equity, the company disclosed in a recent SEC filing. The Houston-based biotechnology firm, specializing in biological products, announced on Monday that it had finalized an Exchange Agreement on November 1, 2024, with the holder of its promissory notes.
Under the terms of the agreement, the note holder agreed to convert an aggregate principal amount of $2.4 million of the company's 25% Senior Secured Convertible Promissory Notes, along with accrued interest, into 3,000 shares of Series E Convertible Voting Preferred Stock.
This strategic move allows Kiromic BioPharma to strengthen its balance sheet by reducing debt. The exchange was conducted in compliance with Section 4(a)(2) of the Securities Act of 1933, which exempts certain transactions from registration if they meet specific criteria, such as being made to accredited investors or not involving a public offering.
The conversion of debt into equity is a common financial strategy companies use to manage their capital structure and is often seen as a positive step towards financial stability and potential growth.
Kiromic BioPharma, which trades under the symbol OTCQB:KRBP, is recognized as an emerging growth company and operates within the biopharmaceutical sector with a focus on developing innovative therapies.
In other recent news, Kiromic BioPharma has made notable strides in its operations. The biotechnology company announced a significant financial restructuring, involving the exchange of $2.4 million in senior secured convertible promissory notes for 3,000 shares of newly designated Series E Convertible Voting Preferred Stock. This strategic move is part of Kiromic BioPharma's broader efforts to manage its capital structure and obligations.
In addition, the company's lung cancer treatment, Deltacel™, received Fast Track designation by the U.S. Food and Drug Administration (FDA). This regulatory milestone aims to expedite the development and review of the therapy for patients with metastatic non-small cell lung cancer (NSCLC) who have not responded to standard treatments. Deltacel™ is currently undergoing a Phase 1 clinical trial, targeting stage 4 NSCLC patients.
Moreover, Kiromic BioPharma secured $2M in convertible note financing, further bolstering its capital for operations. The company also reported promising results from its Deltacel Phase 1 clinical trial, with one patient experiencing a 6.6% reduction in tumor size two months post-treatment.
InvestingPro Insights
Kiromic BioPharma's recent debt-to-equity exchange aligns with its financial challenges, as highlighted by InvestingPro data. The company's market capitalization stands at a modest $1.73 million, reflecting its small-cap status. This move to convert $2.4 million of debt into equity is significant given the company's size and financial position.
InvestingPro Tips reveal that Kiromic is "quickly burning through cash" and "operates with a significant debt burden." These insights underscore the importance of the recent debt conversion, which aims to alleviate some of the company's financial pressures. The company's negative EBITDA of -$20.11 million for the last twelve months as of Q2 2024 further emphasizes the need for such financial restructuring.
Despite these challenges, Kiromic's stock has shown a remarkable 273.33% price return over the past year. However, investors should note that the stock "generally trades with high price volatility," according to another InvestingPro Tip. This volatility is evident in the contrasting 28.74% year-to-date return versus the -54.1% return over the last six months.
For those seeking a deeper understanding of Kiromic's financial health and market position, InvestingPro offers 15 additional tips, providing a comprehensive view of the company's prospects and challenges.
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